Negative Senate vote leaves tug firm at sea

Bill to let dock pilot keep company fails

April 07, 2001|By Paul Adams | Paul Adams,SUN STAFF

The future of Baltimore's only independent tugboat company remains in question after a Senate committee's rejection of legislation that would have allowed the company's founder to keep his license to dock oceangoing ships.

Joseph L. Krause Jr. said he will not sell Krause Marine Towing, a 12-year-old family tugboat business that shipping agents credit with forcing competitors to lower their rates.

But the loss of his docking pilot's license would cost Krause his six-figure income and potentially make it harder for the tugboat company to compete.

And while piloting and docking fees account for a tiny portion of a ship's overall port costs, the port of Baltimore's biggest customers are taking a keen interest in the dispute partly out of concern that it might put Krause Marine out of business.

Evergreen America Corp., the largest shipping line to call in Baltimore, and Wallenius Wilhelmsen, which recently signed a 20-year lease with the Maryland Port Administration, both submitted letters supporting House Bill 1418.

"I can't understand why in this country of free enterprise, I can't do what I want to do [for a living]," Krause said. " ... I'm not going to let my family go out of business like this."

The conflict is the latest wrinkle in a controversial law passed last year that required docking pilots to sever ties with the port's major tugboat companies and become licensed by the state. Port docking pilots guide cargo ships into berths with the assistance of tugboats.

Because docking pilots exercise control over how and when tugboats are used in the port, a state licensing board has proposed a regulation prohibiting pilots or their family members from owning a tugboat company.

The regulation is aimed largely at Krause, who transferred his stake in Krause Marine to his wife last year in hopes of heading off the dispute. House Bill 1418 would have essentially overruled the proposed regulation and allowed Krause to keep his license.

"I don't think the state should be putting somebody out of business," said Del. Van T. Mitchell, who introduced the bill in the House, where it passed 86-38 on March 24.

But Mitchell's Senate counterparts agreed with Krause Marine's competitors, who say the legislation would create a potential conflict of interest in the port and hurt competition.

"I think people felt that it would give [Krause] an unfair advantage, and that's the bottom line," said Sen. Brian E. Frosh, a Montgomery County Democrat who voted against the bill.

The issue pits Krause Marine against its two rivals, Moran Towing and McAllister Towing. Among other things, the two rival tug companies say that Krause could use his state-sanctioned position as a docking pilot to steer business to Krause Marine.

Both sides enlisted the help of powerful supporters, with maritime unions supporting Moran and McAllister, and the Maryland Port Administration and other port business interests backing Krause's position.

Paul P. Swensen, vice president and general manager of Moran Towing, said: "Their voting it down says the legislature agrees with us that there is a conflict of interest, and it needs to be dealt with."

The Maryland Board of Docking Masters, which oversees the docking pilots, will likely decide in the next month whether to implement the conflict of interest regulation.

If it is approved, Krause has indicated, he may sue to keep his pilot's license, though no decision has been made.

Krause said the proposed conflict of interest regulation is just another attempt by his competitors to drive him out of business.